Correlation Between SLR Investment and Global Ship

Can any of the company-specific risk be diversified away by investing in both SLR Investment and Global Ship at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SLR Investment and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SLR Investment Corp and Global Ship Lease, you can compare the effects of market volatilities on SLR Investment and Global Ship and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SLR Investment with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Global Ship.

Diversification Opportunities for SLR Investment and Global Ship

0.34

Correlation Coefficient

SLR Investment  Global Ship

Weak diversification

The 3 months correlation between SLR and Global is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and SLR Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SLR Investment Corp are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of SLR Investment i.e., SLR Investment and Global Ship go up and down completely randomly.

Pair Corralation between SLR Investment and Global Ship

Assuming the 90 days horizon SLR Investment is expected to generate 1.32 times less return on investment than Global Ship. But when comparing it to its historical volatility, SLR Investment Corp is 1.57 times less risky than Global Ship. It trades about 0.07 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,008  in Global Ship Lease on December 19, 2024 and sell it today you would earn a total of  116.00  from holding Global Ship Lease or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SLR Investment Corp  vs.  Global Ship Lease

SLR Investment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SLR Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Ship Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SLR Investment and Global Ship

The main advantage of trading using opposite SLR Investment and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment position performs unexpectedly, Global Ship can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Ship will offset losses from the drop in Global Ship's long position.

The idea behind SLR Investment Corp and Global Ship Lease pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..